Citadel poaches Elliott’s golden boy | USAEMALL.com

One big law firm merger to start: Herbert Smith Freehills will combine with US-based Kramer Levin to form one of the top-20 global law firms by headcount, in the latest sign of consolidation among mid-sized groups on either side of the Atlantic.

In today’s newsletter:

• Elliott’s homegrown star leaves for Citadel

• Hedge funds fight over Thames Water loan

• India’s IPO streak cools

Another shake-up at Elliott

Working your way up to the pinnacle of Elliott Management is no easy feat. That’s what makes star portfolio manager Nabeel Bhanji’s departure this week all the more surprising.

Bhanji has been with the hedge fund for more than a decade, and has led some of the activist’s most high-profile international campaigns in recent years.

And he’s walking away for a bigger prize at Citadel.

Bhanji, 38, is one of Elliott’s homegrown stars. The fund, which Paul Singer founded more than 40 years ago, is known for making bold, billion-dollar wagers that other investors can only hope to emulate.

Bhanji was central to some of Elliott’s biggest activist positions, including at mining group Anglo American this year. He was also key to Japanese investments, such as with tech conglomerate SoftBank, Dai Nippon Printing and Toshiba.

But after being promoted to equity partner earlier this year, Bhanji is leaving for a global leadership position and investment role at Citadel.

The hedge fund’s not known for instigating the sort of activist campaigns that are Elliott’s bread and butter, so DD will be keeping tabs on exactly what Bhanji’s new job will look like.

When he spoke at the FT’s annual Due Diligence Live conference last month, he gave no indication his time would soon be up. Instead, he seemed to be gearing up for more activity: he said a spate of UK stocks were trading “very cheap”, making them prime targets.

Bhanji’s exit is the latest in a string of recent departures from the firm’s London office, which is led by Gordon Singer, son of the firm’s 80-year old founder.

He follows James Bayliss, the fund’s head trader in London, who left last autumn. Shortly before Bayliss, senior portfolio manager Mark Levine, and portfolio managers Sebastien de La Riviere, Mark Wills and Giorgio Furlani, also left.

Bhanji’s departure syncs up with a few big promotions at Elliott. New York-based portfolio manager Samantha Algaze — who had a hand in the Caesars Palace trade — has been tapped as an equity partner, making her the first female partner in the firm’s history.

And two other equity partners, John Pike (who launched the campaign against Southwest Airlines) and Pat Frayne (a specialist in CLOs), were promoted to the Elliott’s management committee. Algaze’s promotion brings the firm to 14 equity partners globally.

The hedge fund turf war at Thames Water

Elliott hasn’t just dominated the activist fights in corporate boardrooms this year. It’s also a formidable player in distressed situations such as the financial crisis plaguing Britain’s largest water company, Thames Water.

The $70bn hedge fund is just one of several hard-knuckle investors that are engaged in a tussle for control over the future of Britain’s largest water company.

Elliott, Silver Point Capital and GoldenTree Asset Management are in the vanguard of a group of top-ranking bondholders that has agreed to provide a loan of as much as £3bn to the cash-strapped utility. Without new financing, Thames Water has warned it could run out of money around Christmas.

On the other side, holders of the company’s second-ranking bonds such as London-based credit fund Polus Capital Management and New York-based investment firm Zimmer Partners are behind an effort to gatecrash the party.

They’re offering to provide their own cheaper £3bn loan that they say will save the troubled utility hundreds of millions of pounds.

The fact that these proposed new loans would rank ahead of all of Thames Water’s existing bonds explains why the brewing spat is becoming so contentious.

And while the second-ranking bondholders’ loan may have a lower interest rate, top-ranking bondholders argue that it would be hard to implement without their approval.

Whatever the outcome, Britain’s largest water utility is at the epicentre of a fight between some of the sharpest credit specialists from both sides of the Atlantic — a clear sign of its fall from grace in debt markets.

Can India’s IPO market keep up the momentum?

Asia’s largest IPO this year, the $3.3bn listing of Hyundai Motor India, the Korean carmaker’s Indian business, received a lukewarm reception. That’s not deterring lossmaking food delivery service Swiggy, which is attempting to excite investors with its own $1.3bn offering.

It’s set to list on Wednesday as the second-largest Indian IPO of 2024. And instead of the market fanfare the company had hoped for, it looks like it could become another indicator that the country’s once-buoyant IPO scene is losing momentum.

The numbers are bleak: the Nifty 50 blue-chip index has fallen 3.3 per cent over the past month as foreign investors sold off a record $11.2bn of local stocks in October. Signs suggest we may be nearing a potential end to investor hype over India.

Corporate earnings have underwhelmed, while consumer demand has softened. This might be a concern for the private equity groups that have shifted the focus of their Asia-Pacific funds from China to India in recent years.

By last Friday, Swiggy’s retail segment barely covered its target, with institutional investors stepping in to ensure the offering was more than three times subscribed. That paled in comparison to earlier sales that made India the largest IPO market after the US this year.

It doesn’t help that Swiggy lives in the shadow of its bigger and already public rival Zomato. The now profitable app — which competes with Swiggy over rapid deliveries in the country’s biggest cities — has seen its share price soar 107 per cent this past year.

Analysts caution that Swiggy may take time to follow suit.

As the listing approaches, all eyes are on whether India’s second-largest delivery company can match the high expectations set by the country’s recent IPO frenzy — or whether it’ll be the latest sign of market appetite waning.

Job moves

• Chipotle Mexican Grill has named Scott Boatwright, who was previously chief operating officer, as its permanent chief executive. He has held the post on an interim basis since Brian Niccol left to lead Starbucks in August.

• Davis Polk is launching a European restructuring practice. The firm has hired Jifree Cader and Mark Knight as partners for the team in London, who both join from Sidley Austin.

• Cleary Gottlieb has promoted 26 lawyers to partners in practice areas including banking, capital markets and M&A.

• Gibson Dunn has hired Joshua Bauernfreund of counsel for its restructuring practice in London. He joins from Slaughter and May.

Smart reads

Musk’s ‘A-team’ Elon Musk isn’t expected to take a formal role in Donald Trump’s White House, the FT writes. But the billionaire’s allies are well positioned for official posts.

Trading whiz Don Wilson has made his name in Chicago through a series of lucrative bets: first by bidding for the trading book of Lehman Brothers, and then with early bets on bitcoin, the FT writes. What’s next?

Corporate shake-ups Restructurings have become ubiquitous this year, with companies from Amazon to Citi overhauling management, the FT reports. A lack of planning could undermine the benefits for the employees that stick around.

News round-up

Deutsche’s private bank fires over 100 senior bankers in cost-cutting drive (FT)

Abu Dhabi sovereign wealth fund buys stake in US software group Qlik (FT)

IAC explores Angi spin-off as Barry Diller media group slims down (FT)

Argentine star fintech Ualá wins fresh funding from Allianz and Alan Howard (FT)

FTX sues Binance and former chief Changpeng Zhao for $1.8bn (FT)

Fund manager Terry Smith’s pay falls to £28mn (FT)

AbbVie shares tumble after schizophrenia drug disappoints (FT)